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On Deadline blog: Peter Carpenter's mission: warn of employee-benefit 'time bomb'

Original post made by Jay Thorwaldson on Dec 20, 2011

Every week I get two or three e-mails from Peter Carpenter drumming in a single message: that retirement costs/benefits for public employees are threatening to bankrupt cities, counties, special districts and California itself -- maybe even America.

I recently sat down with him to ask a single basic question: Has he gone over the edge on this seemingly obsessive topic?

He laughed and said not really. But he grows serious as he warms to the subject.

"It's a huge time bomb," he says of the mostly unfunded retirement benefits, now reportedly in the hundreds of billions of dollars statewide.

As for his e-mails, he said he just has a good search program and simply forwards articles from newspapers and magazines as well as programs and reports on the subject. Carpenter said it takes him just moments to glance over an article then send it out to his e-mail list, currently at about 80 recipients -- nearly half of whom are public officials. But after nearly five years of the e-mail blitz he is disappointed that officials have been slow in picking up on the message. Union leaders seem not to have heard it at all, and are engaged in rear-guard actions to forestall cutbacks in present or future benefit packages.

Most e-mail attachments carry dire predictions; some report on drastic measures specific public agencies are taking or considering, including literal bankruptcy as in Vallejo, a side effect of which was wiping out retirement agreements.

Carpenter's message is that in the flush years of the past couple of decades, off and on, agencies promised more than they could deliver in terms of retirement benefits (sometime lavishly so) when negotiating with unions and employee groups. No surprise. It's the American Way, reflecting a pay-later credit-card mentality that drives so much of the economy and the personal/family lives of many millions of us.

Leaner times mean limits. Still, going back to renegotiate past deals is tough for elected officials and administrators, especially in areas where unions have big political clout.

Yet Carpenter's personal and professional interests go far beyond retirement benefits. They range from a decades-long interest in "mission and values" concerns to implementing high-tech communications systems in corporate and community institutions. He is personally engaged in a major community-building project in Africa, and occasionally is a fierce advocate of open meetings of government agencies at all levels, as codified in the state's Ralph M. Brown Act.

He may have inherited from his family some of his "transparency" interests. An uncle, Richard "Bud" Carpenter, then a reporter for the San Francisco Chronicle, decades back did a 10-part series on closed-door meetings that became an important motivation for the Brown Act.

Today, Carpenter fears the act has been weakened "because nobody is enforcing it." But "it's great virtue is what a good DA can do" in setting a standard of transparency, creating a public culture of openness in the conduct of public business. An example is the recent undoing of election of mayor in Menlo Park due to too many private discussions among council members.

Carpenter's varied background reflects his range of interests. Born in 1940 in San Francisco, he spent his early teens in Jacksonville, Fla., in the Deep South -- "about as deep redneck as you can get" with extreme segregation and whites-only beaches.

His parents had a rule: Family members "could never talk about a group, only about individuals. It was one of the greatest gifts my parents gave me." They also enforced mandatory family dinners together with real conversations, often about issues and politics as well as family matters.

Two lifelong values they promoted were (1) "You will have a job," and (2) "You will be involved in the community."

Carpenter questions the importance people today put on going to college. He favors a national-service alternative for many young persons.

"Education for what?" he asks, citing huge student-loan debts and frustrating job searches even for college grads. Carpenter himself went to Harvard, where he joined the ROTC (Reserve Officer Training Corps) and wound up in the Air Force during the late 1960s.

"Those were the most exciting six years of my life," he recalls. The stint included three years (1966-1969) working with the computer-networking project ARPA, the Advanced Research Projects Agency (later the Defense Advanced Research Projects Agency, or DARPA) that was the predecessor of many aspects of Internet as we know it today. Most of the ARPA work related to Vietnam War, he said.

He held various federal positions in the early 1970s and from 1973 to 1976 served as assistant vice president for medical affairs at Stanford University, including a year as executive director of the Stanford Medical Center.

When he joined the Palo Alto-based ALZA Corporation in 1976 "one of the first things I did was network ALZA," he recalls, drawing on his ARPA experience. He served in various capacities, including vice president and executive vice president for corporate strategy. He retired from ALZA in 1990 but consulted on mission-and-values issues for two more years.

He has served on numerous community boards and advisory boards, and currently is in his second stint on the board of the Menlo Park Fire Protection District, which covers Menlo Park, Atherton, East Palo Alto and parts of unincorporated San Mateo County. (See his C.V. for his complete background [Web Link here] .)

He is proud of the fire district's transparency and its requirement that labor-negotiation results must be public for 15 days before the board can vote to adopt them.

It was his first term on the fire-district board in 2003 that alerted him to the retirement time bomb. He and other board members voted to support a 3 percent retirement at age 50 rather than the earlier 2.5 percent at 55 -- similar to what then-Governor Gray Davis granted state prison guards.

CalPERS, the state retirement board, "was making so much on its investments that we voted for it," Carpenter recalls of the days before the bottom fell out of the economy.

"It was the dumbest thing I ever did," he says now. "We didn't have to account for unfunded liabilities."

Other public-safety employees got similar boosts, partly in lieu of immediate salary increases and because of generally lower pay. But over the past decade or so public-safety pay caught up and began to surpass the median income of taxpayers in many communities, Carpenter said.

The district and its firefighters locked horns on pay and benefits in 2008, when the union said it wanted an 11 percent raise. For 2 1/2 years there has been no new contract agreement. Under the official state-declared impasse the district can impose a new contract.

The trend overall is to push for a so-called two-tiered system, with new employees getting a lower level of benefits than existing employees.

In the big picture, Carpenter feels his e-mail campaign "has made a very minor dent" by raising awareness of some local officials. But the pay-and-benefits matter has national implications, and a fairness aspect.

"We pay our firefighters more than we pay Navy Seals. We pay the average firefighter more than we pay the colonel who flies Air Force One."

NOTE: Former Weekly Editor Jay Thorwaldson can be e-mailed at jthorwaldson@paweekly.com with a cc: to jaythor@well.com.

Comments (13)

Posted by Anon., a resident of Crescent Park
on Dec 20, 2011 at 12:28 pm

I think this IS a huge question. The average benefits I have seen mostly seem reasonable, but there are some situations where opaqueness or politics has lavished money and benefits way past anything reasonable. You can walk up and down a spectrum of stories that will yank you one way or the other, but when you find abuses or even crimes, what is there to do. What is a fair answer to these questions? I have not heard anyone really explain and describe the problem in a factual way that does justice to the question. It is not fair to alter agreements to some that were negotiated and signed - nor is it fair for those that do not have such agreements that they get no security or benefits merely because they had no political leverage to rip-off the taxpayers. The whole issue can be seen in the rest of the economy as well and in the whole idea of compensation and benefits.

It seems like most of the answers to our current problems are so complex and intractable that we just settle for dumping the injustice and problems on to the weakest groups and people. I am not impressed by this kind of practice in our country and state that claims so much superiority over the rest of the world.


Posted by Craig Laughton, a resident of College Terrace
on Dec 20, 2011 at 3:16 pm

Jay,

This seems like good opportunity to invite Stephen Levy to respond to Peter Carpenter's concerns. I am not an economist, but it seems to me that a combination of bailouts and inflation will be how we muddle through this issue, like it or not.


Posted by Resident, a resident of Community Center
on Dec 21, 2011 at 1:23 pm

I am not surprised, but I am disappointed in the lack of responses to Jay's article. I also want to thank Peter for his efforts to bring this issue to the public's attention. It is part of a larger issue in this country (and the world) where folks are unwilling to fund expenses so they go in to debt. On some levels the problem is more obvious (the national debt), although the solutions do not seem likely to be acted upon. The unfunded public employee pension benefit is even more of a challenge because it is not on most folks radar. They are more concerned with their daily lives and providing for their families. Most aren't financially sophisticated enough to understand unfunded liabilities and the level of future expense outflows that are being accumulated. The ones who do understand the issue are the public employee unions and the politicians. But rather than address the issue, the unions fund the election of politicians who continue to grant unsustainable pensions. I'm not sure the problem will be resolved unless a group of individuals with private contributions is able to put an initiative on the ballot to address the problems. I would recommend the following:
1.) all budgets need to be balanced every year, including the present value of all future payments that have already been committed to
2.) all public employees pensions should be converted to defined contribution (no more defined benefit)
3.) all public employees (including safety workers) should have not begin to receive pension payouts until they turn 65. They can stop work earlier, or take a new job if they are no longer able to do their existing job, but the payouts shouldn't start until 65.
4.) Eliminate all the issues with double dipping

I could go on but I'm not sure it is a productive use of my time. I basically to get out a few key points.

It is so disappointiong that this issue does not get more attention.


Posted by Walter_E_Wallis, a resident of Midtown
on Dec 21, 2011 at 5:55 pm

Walter_E_Wallis is a registered user.

And how about variable pensions? Everybody else has to take the blows.


Posted by Carroll Harrington, a resident of Community Center
on Dec 21, 2011 at 6:38 pm

I think this is one of the most serious problems in the United States today. Peter, thanks for your unrelenting attention, to put it mildly, to this issue.


Posted by pat, a resident of Midtown
on Dec 21, 2011 at 9:46 pm

From Los Altos Town Crier, 12/21: Resident's watchdog group plunges into pension debate
Web Link


Posted by Perspective, a resident of Meadow Park
on Dec 22, 2011 at 7:53 am

Wow...I am quite impressed by both Peter Carpenter and Jay Thorwaldson's reporting/writing on Carpenter and his points.

BTW, of course we always like what we agree with, and I completely agree with Carpenter on unfunded pensions breaking us. We can't ( or at least we can try to "can't") break our promises already foolishly made to those already retired, or perhaps even within a couple years of retirement..but there is truly no reason to not delay retirement by age, ( add a year of work before retirment for every year less than 50 or something similar to raise the age of retirement to be more in line with private sector in their 60s), and to not "tier" retirement based on new hire vs already hireds. ( new hires retire later, get less...)

There are a lot of intelligent solutions to prevent the dam from breaking...let's listen to Carpenter.


Posted by Public-Sector-Pensions-Will-Bankrupt-America, a resident of Another Palo Alto neighborhood
on Dec 22, 2011 at 1:14 pm

Carpenter is only one of many people trying to get this message out:

The best place to get a recap of the daily news on "pensions" is:

Pension Tsunami.com:
www.pensiontsunami.com

People are sort of getting the message, but the numbers are so big, that it's hard to find very many people who understand the reality of the issues, or the costs that society is looking at to pay off these obligations.

No one on the Palo Alto City Council seems to understand, at least as one can sense by the dearth of public communications about Palo Alto pension obligations to the public.


Posted by William, a resident of Old Palo Alto
on Dec 23, 2011 at 3:13 am

Every firefighter and police officer that you see in this city will retire in their 50's, with a six figure yearly salary and full medical for the rest of their life! And we taxpayers will be paying for it.


Posted by chris , a resident of Community Center
on Dec 23, 2011 at 8:08 am

A $100,000/yr pension is equivalent to about $2.5 million or more if paid in a lump sum. Think of that, be a firefighter and become a millionaire! In five years or less, state and city money spent in this area will severely crowd out spending in other important areas like education and healthcare. We need to make some hard choices now before it becomes too late.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Dec 23, 2011 at 9:13 am

It is about time....... Thank you for starting and hopefully more will take note.


Posted by What a Joke, a resident of Downtown North
on Dec 23, 2011 at 1:18 pm

He voted for it and now wants to complain about it and the fact that no one today will fix his mistake.

He should be embarrassed and go crawl under a rock.


Posted by Peter Carpenter, a resident of Atherton
on Dec 24, 2011 at 9:40 am

What a joke to think that ignorance and denial are better than experience.


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